SEC Files for Temporary Restraining Order Against Binance, CZ

The SEC seeks to prevent defendants from “destroying, altering or concealing relevant records”

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Aleksandra Sova/Shutterstock.com modified by Blockworks

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The SEC has petitioned a court for a temporary restraining order against Binance and its affiliates — BAM Management and BAM Trading — in a move that could freeze the assets of Binance.US.

The SEC’s motion, filed in the US District Court for the District of Columbia on Tuesday, named Binance, BAM Management and BAM Trading. 

If approved, the restraining order would also prevent defendants from “destroying, altering or concealing relevant records.” It comes one day after the SEC sued Binance. 

The order, if granted by the court, would also allow the SEC to order “expedited discovery” of potential evidence. The regulator filed for its motion to be approved on an “expedited basis,” saying a speedy outcome would “ensure the safety of customer assets and prevent the dissipation of available assets for any judgment.” 

In making its case, SEC lawyers cited “years of violative conduct” from Binance and its affiliates, as well as “disregard [for] the laws of the United States, evasion of regulatory oversight, and open questions about various financial transfers” when it comes to its customers. 

Binance.US told Blockworks in a statement that “User assets remain safe and secure and the platform continues to be fully operational with deposits and withdrawals functioning as normal.”

The SEC also requested the “repatriation and other specified relief concerning the custody and control of fiat currency and crypto assets deposited, held, traded, and/or accrued by customers on the Binance.US crypto asset trading platform or otherwise held for the benefit of customers of BAM and the Binance.US Platform.”

The SEC on Monday filed a lawsuit against Binance, BAM Management, BAM Trading and CEO Changpeng “CZ” Zhao alleging violations of the Exchange Act, Securities Act and potential fraud. 

The SEC also claimed that BAM Trading’s staking program on Binance.US is an investment contract — and falls under the definition of a security as a result.  

The regulatory agency also claims Binance and Zhao were “intimately involved in directing BAM Trading’s U.S. business operations.” Zhao was also named in the temporary restraining order. 

Binance denied the SEC’s claims, saying “most recently, we have engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations.

Binance.US added in their statement that “Until recently – despite years of engagement – the SEC Staff has not expressed a concern about the safety of customer assets. And through near around-the-clock dialogue over the past week, company’s counsel addressed SEC Staff’s concerns regarding the safety of customer assets. Despite the information the company has provided to ensure SEC Staff of the safety of customer assets, the Staff has nonetheless decided to file the motion seeking a temporary restraining order and preliminary injunction. While we are disappointed by this action, we look forward to defending ourselves in court.”

Binance did not respond to a request for comment.

Updated June 6th at 6:10pm ET: Added comments from Binance.US


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